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June 2006

Vol. 11, No. 26 Week of June 25, 2006

Noble Energy JV scores again

Raton discovery well said to encounter 90 feet of pay across three zones; appraisal work planned for 2006 fourth quarter

By Ray Tyson

For Petroleum News

Noble Energy and Gulf of Mexico deepwater partners Samson Offshore and Energy Partners continue to play their cards right, scoring what looks like a second commercial discovery in a row on an eight-block prospect quietly assembled by the three E&P independents in the exploration-congested Mississippi Canyon area.

“While it is premature to estimate resources, the well encountered 90 feet of hydrocarbon pay over three zones,” operator Noble said June 15 of the partners’ most recent Mississippi Canyon discovery, Raton.

Raton is just five miles from the partners’ initial Redrock discovery, reported in the April 23 issue of Petroleum News.

Noble and its co-venturers also were guarded with information about the Redrock discovery, saying only that the Redrock well encountered one target with “high quality pay” and that a second objective was identified, “the quality and extent of which is currently under evaluation.”

Development plan mentioned

The partners stopped short of announcing reserve estimates or declaring Raton and Redrock commercial successes. However, Noble and Energy Partners did disclose in separate statements that appraisal drilling would be used to formulate a single development plan for both discoveries, indicating Raton and Redrock are indeed strong candidates for field development.

“The results of the initial well at Raton are encouraging, particularly in light of the proximity of the well to our Redrock discovery,” said Dave Stover, Noble’s senior vice-president for North America.

Noble said the Raton discovery well was temporarily abandoned pending further delineation drilling, currently scheduled for this year’s fourth quarter. Noble and its partners are performing reservoir modeling on Redrock and plan to conduct further appraisal work on the discovery this year and into 2007.

The Raton discovery well is located on Mississippi Block 248 and was drilled to a total measured depth of 20,106 feet in 3,400 feet of water. The Redrock discovery well is on Mississippi Canyon Block 204 and was drilled to a measured depth of 23,365 feet in 3,334 feet of water.

Noble holds a 50 percent interest in Raton and Redrock, with Energy Partners and Samson each holding a 25 percent share. In December 2005, Energy Partners acquired a 25 percent stake in 23 undeveloped Gulf of Mexico leases held by Noble, a large independent producer based in Houston, Texas. The agreement called for New Orleans-based Energy Partners to participate in a minimum of two exploratory wells in 2006.

Another 11 prospects have been identified on deepwater acreage held jointly by Noble, Energy Partners and Samson, said Richard Bachmann, Energy Partners’ chairman and chief executive officer. Raton and Redrock represent his company’s first exploration wells in deepwater Gulf of Mexico.

Bachmann: two wells, two discoveries

“We are obviously excited that the two initial deepwater wells drilled under our agreement with Noble Energy have lead to two discoveries,” Bachmann said. However, he said that Energy Partners also has “independent plans” to enrich its own drilling portfolio through future Gulf of Mexico oil and gas lease sales.

An up and coming E&P independent, Energy Partners drilled 44 exploratory wells in 2005 and posted 28 discoveries, an envious 64 percent success rate. Of the total, the company had 16 discoveries in 28 wells offshore and 12 discoveries in 16 wells onshore. Energy Partners also has made a $2.2 billion bid for fellow E&P independent Stone Energy, a merger that would greatly expand Energy Partners’ reserve base. (See related story, page 19.)

Eight contiguous leases

The Noble-lead joint venture managed to piece together an impressive acreage position consisting of eight contiguous federal leases in Mississippi Canyon, a resource-rich area of the Central Gulf of Mexico dominated by major oil companies and large E&P independents.

For one, the joint venture did not publicly disclose their initial Redrock discovery until after the March Central Gulf of Mexico lease sale, in an apparent effort to minimize bidding competition on exploration blocks adjacent to the Redrock prospect.

Sale 198 was the federal government’s most successful Central Gulf offering in eight years, generating $588 million in apparent high bids on 405 offshore blocks, a 66 percent increase over the previous year’s Central Gulf sale on 428 blocks. It also was one of the more competitive lease sales in recent memory, with an unusually high number of blocks receiving multiple bids, and an unusually large number of individual blocks attracting bids greater than $1 million.

As it turned out, the Noble-Samson-Energy Partners alliance submitted the only bids on two Mississippi Canyon blocks adjoining the Redrock discovery, with combined high bids of less than $1 million. The trio shelled out single winning bids of just $411,840 for Mississippi Canyon 160, located just north of Redrock, and $475,200 for Mississippi Canyon 203, located just west of Redrock.

The two exploration blocks acquired by the Noble partnership in Central Gulf of Mexico Lease Sale 198 represented the partnership’s seventh and eighth contiguous Mississippi Canyon leases. The eight blocks make up roughly 40,000 acres.






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